Gold-silver alloy nanoparticles with varying mole fractions are prepared in aqueous solution by the co-reduction of chlorauric acid HAuCl4 and silver nitrate AgNO3 with sodium citrate. As the optical absorption spectra of their solutions show only one plasmon absorption it is concluded that mixing of gold and silver leads to a homogeneous formation of alloy nanoparticles. The maximum of the plasmon band blue-shifts linearly with increasing silver content. This fact cannot be explained by a simple linear combination of the dielectric constants of gold and silver within the Mie theory. On the other hand, the extinction coefficient is found to decrease exponentially rather than linearly with increasing gold mole fraction x(Au). Furthermore, the size distribution of the alloy nanoparticles is examined using transmission electron microscopy (TEM). High-resolution TEM (HRTEM) also confirms the formation of homogeneous gold-silver alloy nanocrystals.